Question

Trico Company set the following standard unit costs for its single product.

Direct materials (30 Ibs. @ $4.40 per Ib.)	$	132.00
Direct labor (6 hrs. @ $14 per hr.)		84.00
Factory overhead—variable (6 hrs. @ $8 per hr.)		48.00
Factory overhead—fixed (6 hrs. @ $12 per hr.)		72.00
Total standard cost	$	336.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 69,000 units per quarter. The following flexible budget information is available.

	Operating Levels
		70%		80%		90%
Production in units		48,300		55,200		62,100
Standard direct labor hours		289,800		331,200		372,600
Budgeted overhead
Fixed factory overhead	$	3,974,400	$	3,974,400	$	3,974,400
Variable factory overhead	$	2,318,400	$	2,649,600	$	2,980,800

During the current quarter, the company operated at 90% of capacity and produced 62,100 units of product; actual direct labor totaled 291,000 hours. Units produced were assigned the following standard costs.

Direct materials (1,863,000 Ibs. @ $4.40 per Ib.)	$	8,197,200
Direct labor (372,600 hrs. @ $14 per hr.)		5,216,400
Factory overhead (372,600 hrs. @ $20 per hr.)		7,452,000
Total standard cost	$	20,865,600

Actual costs incurred during the current quarter follow.

Direct materials (1,466,000 Ibs. @ $7.40 per lb.)	$	10,848,400
Direct labor (291,000 hrs. @ $12.60 per hr.)		3,666,600
Fixed factory overhead costs		3,014,600
Variable factory overhead costs		3,272,200
Total actual costs	$	20,801,800

	Actual Cost 4398000 -1746800 Standard Cost AQ x AP AQ x SP SQ x SP 1,466,000 x $7.40 1,466,000 x $4.40 1,863,000 x $4.40 $10,848,400 $6,450,400 $8,197,200 $4,398,000 2651200 $1,746,800 Direct materials price variance $4,398,000 Unfavorable Direct materials quantity variance 1,746,800 Favorable Total direct materials variance $2,651,200 Unfavorable

	Actual Cost -407400 -1142400 Standard Cost AH x AR AH x SR SH x SR 291,000 x $12.60 291,000 x $14.00 372,600 x $14.00 $3,666,600 $4,074,000 $5,216,400 $407,400 1549800 $1,142,400 Direct labor rate variance $407,400 Favorable Direct labor efficiency variance 1,142,400 Favorable Total direct labor variance $1,549,800 Favorable

3. Compute the overhead controllable and volume variances.

	Controllable Variance Actual overhead Budgeted overhead Controllable variance

	Fixed overhead volume variance Budgeted fixed overhead Fixed overhead cost applied Fixed overhead volume variance

Answer 1